The decision by Indonesian authorities, on 12 January, to ban exports of low-grade ore came as a major shock to the nickel market.

01 Apr 2014

LONDON (Commodity Online): Natixis has forecasted $16,000 per ton for nickel in 2014 and risin to $17500 per ton in 2015 on Indonesia export ban on nickel ore and possible fall in supples. However, the market has substantial surplus in 2014 thus weakening the prospects of a bullish trend emerging.

The decision by Indonesian authorities, on 12 January, to ban exports of low-grade ore came as a major shock to the nickel market. Since then, as the market has digested the full implications of this move, nickel prices have rallied sharply, increasing to a high of over $16,000/tonne in March. Substantial risks remain, both on the upside and downside, as a market that is still struggling with a substantial surplus in 2014 faces up to the prospect of a potential deficit in 2015.

In the near-term, alongside the depletion of China’s accumulated stockpiles, nickel pig iron (NPI) prices will be pushed higher by the growing scarcity (and higher prices) of nickel ore. Over time, Chinese stainless steel producers will substitute increasingly expensive NPI with cheaper imports of ferro-nickel and potentially also refined nickel as the market continues to tighten. I Around these average prices, however, there is expected to be substantial volatility, given the sharply differing fundamentals in 2014 (surplus) versus 2015 (deficit), and the prospect that Indonesia may at any point over the forecast horizon rescind its current ban on exports of unprocessed raw materials.